Opportunity to Interview 401k Company - Help

[NinjaPigeon]

So, I work for a startup company and we are finally ready to pick our 401k provider. We've narrowed it down to two (meaning: we can't afford the others!), and we'll be doing a Safe Harbor 401k. I have a meeting on Wednesday with the front runner and we will be signing papers later this week most likely.

However, I have no idea what to ask! I know that I have to take into account more than just what funds are offered, since I'm approaching this from the side of the company as well.

So, do you guys have any suggestions about how I can interview the 401k provider to find out about any hidden or not so obvious issues?

 

[Achiever51]

I had to manage this process several years ago for my company. Here's a pretty inclusive list of questions you might ask:

http://www.401khelpcenter.com/Bundled_RFP.html



Good luck!

 

[jazz4cash]

So, I work for a startup company and we are finally ready to pick our 401k provider. We've narrowed it down to two (meaning: we can't afford the others!), and we'll be doing a Safe Harbor 401k. I have a meeting on Wednesday with the front runner and we will be signing papers later this week most likely.

However, I have no idea what to ask! I know that I have to take into account more than just what funds are offered, since I'm approaching this from the side of the company as well.

So, do you guys have any suggestions about how I can interview the 401k provider to find out about any hidden or not so obvious issues?

That's quite an oppourtunity (and responsibility) you have. Please continue to share your experiences to whatever extent is ethical. I am curious to know exactly what 'Safe Harbor' means? How much difference in cost for various providers? Given Vanguard's cost structure, I wonder why they are not competitive......thanks

 

[saluki9]

That's quite an oppourtunity (and responsibility) you have. Please continue to share your experiences to whatever extent is ethical. I am curious to know exactly what 'Safe Harbor' means? How much difference in cost for various providers? Given Vanguard's cost structure, I wonder why they are not competitive......thanks

Safe harbor means that the company will contribute 3% of each employees salary to the plan. This keeps highly compensated employees from being tested out of the plan.

Also, Vanguard is not interested in startup plans. Our company was only able to move over to Vanguard when our average account balance reached $50K.

 

[jazz4cash]

Thanks...........so the company contribution is not a match, but just thier payment into the employees DC plan?

 

[NinjaPigeon]

That depends. The employer can just give the 3%, or they can give it and then match 50% of what the employee contributes up to some cap (I think it's 5 or 6%).

The reason we want safe harbor is because that allows us to not be subject to the 401k rules (I forget the name of them) since we don't have enough employees yet to make sure that we all contribute "fairly".

 

[eridanus]

Highly Compensated Employee Rules?

 

[Outtahere]

Highly Compensated Employee Rules?

Yes, that rule takes a chunk out of my 401k contributions every year. We looked at doing a Safe Harbor but it was just to expensive for the company.